• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Technology

Streaming May Throw Satellite, Broadcast Companies Out of the Game

For examples, look no further than the NFL and Howard Stern.
By CODY WILLARD Oct 19, 2015 | 03:30 PM EDT
Stocks quotes in this article: NFLX, SIRI, SNE, LGF, GOOGL, AAPL, DISH, T

What do Howard Stern and the NFL have in common? Content is king, that's what. 

For more than 10 years, I've been explaining that content is king as broadcast television is dying, and today we see that Netflix (NFLX) has truly become the de-facto standard for watching TV and movies as people, young people especially, are increasingly "cutting the cord from cable." 

But it's about to get even worse for satellite companies and the traditional broadcast television business model. Why? One of the last bastions of strength for broadcasters is "event programming" like sports, from daily baseball and basketball to weekly NFL games and underscored by the ever-growing one-day audience for the Super Bowl. The NFL makes tens of billions of dollars every year by selling the rights to its games.

Clearly, the broadcast channels like NBC, CBS, Fox and ESPN are then turning around and selling ads for those broadcast games, also generating tens of billions of dollars in revenues and billions in earnings every year. 

But as the world's sports fans increasingly consume TV and movies on apps on their smartphones, tablets and TVs, the need to subscribe to a cable package that used to be the only way to get access to those TV shows and movies fades.

I got to thinking about all this yesterday while I was watching the NFL's own Red Zone channel and saw an ad explaining that the best way to catch next Sunday's NFL game between the Buffalo Bills and the Jacksonville Jaguars in London live would be to go to Yahoo.com/NFLStream. You're not going to catch that game on any network or cable channel. And that's a subtle but very important development that will become a trend in coming years. 

If the NFL can directly reach billions of people on their smart devices, streaming boxes and smart TVs, why wouldn't they go ahead and cut out the middle man, the broadcast networks? Ten years from now, it's likely we'll all tune in to the Super Bowl on the NFL Android/iOS app using the HD projector in our smartphone (or smartwatch or other small wearable projector device) to stream it live on a 6-by-6-foot clear space on your living room wall. And the NFL itself will eventually be selling subscriptions for direct access to all its content and games and capturing the tens of billions of ad dollars spent from companies advertising in that content. 

You already see some of this happening as the NFL Network, NFL Red Zone and other major sports leagues create their own cable subscription networks and increasingly stream their product (games included) on apps and websites. 

It's this very concept that has always kept me wanting to invest in content owners, rather than distributors. Netflix, with all its original programming plus the app platform, is both. 

This same concept applies to, say, Howard Stern on SiriusXM (SIRI). Howard makes tens of millions of dollars every year from his contract with SiriusXM. But SiriusXM is clearly making more than that from selling subscriptions to and ads around Stern's content. But what happens in 10 years when every new car sold comes with your choice of Android or iOS dashboard control centers tied to 6G wireless? Will Howard Stern need to be part of a bigger package of SiriusXM or will you simply use the Howard Stern app and he/his team will keep all the spoils? Maybe it'll be something in between, where you can subscribe to Stern's shows directly or you can get them as part of the SiriusXM package. The flipside of all this analysis is that there remains value in being part of a larger base of content. For every Howard Stern, there's a million less-popular radio shock jocks and podcasters.

Either way, you'll be using wireless 6G (or whatever the current flavor in wireless data broadband evolution we're in at the time) rather than the lower-quality satellite signal. And that coming change probably puts SiriusXM's model and its huge costs on satellite broadcasting in trouble in the same way that traditional cable/broadcast companies are in trouble.

Some conclusions then: Stick with companies like Netflix that are investing in their apps (and original content) because the future for all forms of media increasingly will center around apps rather than sites, channels or stations. Stick with content owners like Sony (SNE) or Lions Gate (LGF). Keep investing in the smart-device platforms like Google's (GOOGL) Android and Apple's (AAPL) iOS. Stay away from (or maybe get short) satellite broadcasters of all sorts from DISH Network (DISH) to AT&T (T) to Sirius XM. And if you're a content creator like I am, make sure you have your own app on Android and iOS like I do for TradingWithCody. (Google and Apple are part of TheStreet's Action Alerts PLUS portfolio. AT&T is part of the Dividend Stock Advisor portfolio.)

Also, since there's not even any risk from concussion lawsuits (and I say this as a guy who loves to listen to Howard Stern's live shows and rebroadcasts of his Sternthology), don't buy into any future NFL IPO but make sure you invest in the Stern IPO if he ever comes public. 

I expand on this "content is king" concept in today's Cody Underground Podcast available on iTunes or on Scutify. 

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Willard was long NFLX, AAPL and GOOGL, although positions may change at any time.

TAGS: Investing | U.S. Equity | Consumer Discretionary | Technology

More from Technology

Momentum Technology Traders Have a Big Day Ahead This Week

Bob Byrne
Aug 8, 2022 8:30 AM EDT

Traders should be aware that there are a number of favorite tech plays that will be reporting results after Tuesday's close.

For DOCS, the Writing Is on the Wall

Bruce Kamich
Aug 5, 2022 2:49 PM EDT

Doximity has not finished its decline, according to the charts.

Lost in Space: Virgin Galactic Continues to Come Down to Earth

Bruce Kamich
Aug 5, 2022 11:47 AM EDT

A trip to Necker Island may be a better investment here.

Twilio Trips Over Its Outlook: Can It Regain Its Balance?

Bruce Kamich
Aug 5, 2022 8:22 AM EDT

Let's check out the charts for its next move.

Oil Is Out, Tech Is In, but You Knew That Already, Right?

Helene Meisler
Aug 5, 2022 6:00 AM EDT

As energy is drained, someone told me this week how tech is now the long trade. Where have I heard that before? Also, let's look at the risks of the tech comeback.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 09:24 AM EDT PETER TCHIR

    Jobs Report Reaction: Incredibly Strong, But Questions to Ask

    An incredibly strong July jobs report. Not only d...
  • 08:54 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    The Secret to Dealing With FOMO
  • 03:51 PM EDT REAL MONEY

    AMD Second-Quarter Earnings Live Blog

    Real Money's Eric Jhonsa covers 's second-quarte...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login